In December 2022, a 6.4 magnitude earthquake struck Humboldt County, resulting in fatalities, injuries, power outages and damage to roads, bridges, buildings and utility lines. The governor immediately declared a state of emergency for the area.
Further, in December 2022 through January 2023, severe winter storms stretched across California, bringing prolonged rainfall, floods, fallen debris, power outages, damaged roads and levees and mandatory evacuations. In response, the governor announced a state of emergency throughout California.
These emergency conditions are deleterious, not just for their immediate effect on lives, land, buildings and infrastructure, but because they introduce a landlord’s ability to price gouge existing and new tenants for short term gain as demand for shelter temporarily soars.
Price gouging snares businesspeople who take unfair advantage of consumers disrupted in an emergency or disaster by greatly increasing prices, and thus profits, for essential consumer goods and services they provide in their ordinary course of business.
Businesses that reset pricing to levels that constitute price gouging include landlords
Residential landlords may not raise rents by more than 10% during a state of emergency. As reminded by the Office of the Attorney General (OAG), residential landlords guilty of price gouging are subject to imprisonment of one year and a $10,000 fine. [Pen C §396(h)]
Resources for landlords and tenants
Rent gouging is not an issue until an emergency declaration is in effect for your area, which are noticed through the Office of Emergency Services.
Victims or witnesses of price gouging report these incidents online with the Attorney General.
A landlord rent gouging includes excessive increases or imposition of costs on residential tenants as additional fees for property services they offer, including for example:
- gardening services;
- cleaning services;
- utilities; and
- a shorter lease term.
For short-term rental housing advertised on a daily basis such as an AirBnB, the daily price may not be increased by more than 10% following an emergency proclamation for the area in which the property is located.
Further, landlords may not circumvent the price gouging restrictions by evicting a tenant and re-renting at a higher rate. [Pen C §396(f)]
However, tenants may still be evicted for lawful reasons during a state of emergency. [Pen C §396(m)]
Monetary penalties for price gouging were imposed on Santa Monica landlords in 2022 involved in tenant price gouging by raising a tenant’s rent in excess of 10% over prior market rents during a 2020 declared state of emergency related to wildfires. The landlords paid $35,000 to avoid criminal proceedings, according to the Santa Monica Daily Press.
Landlords need to be aware of the local requirements where their rental properties are located, including rental protections, rent stabilization and just cause eviction ordinances.
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